The Reserve Bank of India (RBI) has refused to share “specific details” on the government’s decision to recall high-value banknotes, citing threat to the country’s sovereignty, integrity and security besides danger to life, Bloomberg News reported.
The report comes amid contradictory claims by the government and the RBI that the decision to ban Rs 500 and Rs 1000 notes was taken by the other.
Bloomberg said it asked the central bank 14 questions between December 8 and January 2 but the central bank “claimed exemptions” to some of these and skirted others saying it had “no information”.
Prime Minister Narendra Modi announced the demonetisation on November 8, a decision that sucked out 86% of the currency notes in circulation and left millions lining up at banks and ATMs for cash.
The government has come under stinging criticism from the opposition for allegedly taking the decision without preparing for the cash crunch that followed. The government has defended the move as an attack on illicit cash and counterfeiting.
“To a question seeking details on the number of demonetised notes already at banks on the evening of PM Modi’s speech, the RBI claimed an exemption, citing danger to the life or physical safety of anyone who disclosed this information to the public,” Bloomberg said.
“The RBI also claimed exemptions on two questions seeking detail on its preparations for the demonetisation and studies it used to forecast the impact of the move. Sharing these ‘sensitive matters’ would endanger India’s sovereignty, integrity and security,” it added.
The government told parliament in November the decision to withdraw the 500 and 1000-rupee banknotes was taken by the RBI.
RBI, however, told a parliamentary panel it was the government which “advised” it on November 7 to go for demonetisation.
“The cloak of secrecy that has shrouded the currency ban decision is likely to bolster the view that authorities, both on Mint Street and in New Delhi, were not prepared for such a decision and the way it was announced,” Bloomberg said.
“It risks undermining perceptions of the central bank’s independence and raises questions about PM Modi’s decision-making style and his communication with the RBI,” the report added.